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Register a new userAllocating marketing resources over social networks: A long-term analysis
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In this paper, we consider a network of consumers who are under the combined influence of their neighbors and external influencing entities (the marketers). The consumers opinion follows a hybrid dynamics whose opinion jumps are due to the marketing campaigns. By using the relevant static game model proposed recently in [1], we prove that although the marketers are in competition and therefore create tension in the network, the network reaches a consensus. Exploiting this key result, we propose a coopetition marketing strategy which combines the one-shot Nash equilibrium actions and a policy of no advertising. Under reasonable sufficient conditions, it is proved that the proposed coopetition strategy profile Pareto-dominates the one-shot Nash equilibrium strategy. This is a very encouraging result to tackle the much more challenging problem of designing Pareto-optimal and equilibrium strategies for the considered dynamical marketing game.
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One of the key features of this paper is that the agents opinion of a social network is assumed to be not only influenced by the other agents but also by two marketers in competition. One of our contributions is to propose a pragmatic game-theoretical formulation of the problem and to conduct the complete corresponding equilibrium analysis (existence, uniqueness, dynamic characterization, and determination). Our analysis provides practical insights to know how a marketer should exploit its knowledge about the social network to allocate its marketing or advertising budget among the agents (who are the consumers). By providing relevant definitions for the agent influence power (AIP) and the gain of targeting (GoT), the benefit of using a smart budget allocation policy instead of a uniform one is assessed and operating conditions under which it is potentially high are identified.
We analyze statistical discrimination in hiring markets using a multi-armed bandit model. Myopic firms face workers arriving with heterogeneous observable characteristics. The association between the workers skill and characteristics is unknown ex ante; thus, firms need to learn it. Laissez-faire causes perpetual underestimation: minority workers are rarely hired, and therefore, underestimation towards them tends to persist. Even a slight population-ratio imbalance frequently produces perpetual underestimation. We propose two policy solutions: a novel subsidy rule (the hybrid mechanism) and the Rooney Rule. Our results indicate that temporary affirmative actions effectively mitigate discrimination caused by insufficient data.
We study the implications of endogenous pricing for learning and welfare in the classic herding model . When prices are determined exogenously, it is known that learning occurs if and only if signals are unbounded. By contrast, we show that learning can occur when signals are bounded as long as non-conformism among consumers is scarce. More formally, learning happens if and only if signals exhibit the vanishing likelihood property introduced bellow. We discuss the implications of our results for potential market failure in the context of Schumpeterian growth with uncertainty over the value of innovations.
In social networks, individuals constantly drop ties and replace them by new ones in a highly unpredictable fashion. This highly dynamical nature of social ties has important implications for processes such as the spread of information or of epidemics. Several studies have demonstrated the influence of a number of factors on the intricate microscopic process of tie replacement, but the macroscopic long-term effects of such changes remain largely unexplored. Here we investigate whether, despite the inherent randomness at the microscopic level, there are macroscopic statistical regularities in the long-term evolution of social networks. In particular, we analyze the email network of a large organization with over 1,000 individuals throughout four consecutive years. We find that, although the evolution of individual ties is highly unpredictable, the macro-evolution of social communication networks follows well-defined statistical patterns, characterized by exponentially decaying log-variations of the weight of social ties and of individuals social strength. At the same time, we find that individuals have social signatures and communication strategies that are remarkably stable over the scale of several years.
In the early $20^{th}$ century, Pigou observed that imposing a marginal cost tax on the usage of a public good induces a socially efficient level of use as an equilibrium. Unfortunately, such a Pigouvian tax may also induce other, socially inefficient, equilibria. We observe that this social inefficiency may be unbounded, and study whether alternative tax structures may lead to milder losses in the worst case, i.e. to a lower price of anarchy. We show that no tax structure leads to bounded losses in the worst case. However, we do find a tax scheme that has a lower price of anarchy than the Pigouvian tax, obtaining tight lower and upper bounds in terms of a crucial parameter that we identify. We generalize our results to various scenarios that each offers an alternative to the use of a public road by private cars, such as ride sharing, or using a bus or a train.
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